558: Practical Tax Season Tips For Construction Business Owners

This Podcast Is Episode 558, And It's About Practical Tax Season Tips For Construction Business Owners

Tax season can be a bit overwhelming for construction business owners, especially with many things to keep track of in our industry. But don't worry; we're here to help! We know that construction businesses have unique tax considerations that can be tricky to navigate, such as complex accounting and bookkeeping challenges and issues related to payroll and sales taxes. 

 

That's why staying informed about the latest tax laws and regulations is essential, as well as working closely with a qualified construction accountant and tax professional who can guide you through this process and ensure you comply with all applicable tax rules and regulations. 

 

Preparing for tax season is a year-round endeavor. Tip number one for construction company owners is to update monthly financials using a streamlined software or cloud-based system.

 

This way, come tax time, everything you need is in one place. Well-organized small businesses are better positioned to minimize tax bills while avoiding missing or inaccurate information penalties.

 

Here are four more ways to take the stress out of tax time and maximize your return.

• Know your credits and deductions.

Small businesses typically benefit from a wide range of tax credits. From special allowances for research and development to programs that supplement wages for student employees and apprentices, knowing which credits apply to your business can save you a tax bundle.

It's also essential for business owners to be savvy about deductions. After all, you want to keep as much of your hard-earned revenue as possible. Often-overlooked items you may be able to deduct include:

- Seminars, classes, or conventions you attended to improve your professional skills;

- Unused inventory that you've donated to charity (an excellent reason to consider donating your overstock rather than paying for storage) and

- Capital assets, such as office furniture, computers, and equipment.

Speak to your accountant about the deductions you can plan for each tax year.

• Be careful about what you claim.

If you run your business out of your home, you may be able to claim a portion of expenditures like utilities, insurance, property tax, and rent. But you must keep good records and receipts to justify why you've allocated business costs to your home office.

The same goes for home office computers and mobile phone expenses. Tax authorities will want to see how you've separated these assets from personal and professional use when you claim them as work expenses.

Want to claim drive time as a work expense? Ensure you submit a log of your business-related mileage to demonstrate how your personal vehicle was used professionally.

• Don't miss the deadline!

This should go without saying, but construction business owners are hit with severe penalties for filing taxes late yearly. Missing the deadline can have a range of negative repercussions, including:

- Added interest to amounts owing, plus a late payment penalty;

- Losing your claim to a refund;

- Loss of credits toward retirement or disability benefits and

- Delay of loan approvals (lenders require a copy of your filed tax return to process your application).

• Seek expert advice well in advance.

A survey of small business owners found that a full quarter don't understand their tax obligations. What's more, 27% only speak to their accountant at the last minute, just before the filing deadline.

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